Social Innovations

15 Minutes with Seth Berkley

As a Rockefeller
Foundation health
specialist in the
early 1990s, Dr.
Seth Berkley was
increasingly concerned
by the lack of progress in
developing an AIDS vaccine. The vast
majority of research efforts at the time
were focused on treatments for
HIV/AIDS, and even now, only 2 percent
to 3 percent of the $20 billion the
world spends annually on fighting the
virus is devoted to finding an effective
vaccine.

In 1996, at Berkley’s urging, Rockefeller
established the International
AIDS Vaccine Initiative (IAVI).
Headed by Berkley, IAVI was set up
outside the foundation as an independent
nonprofit.

Since its creation, IAVI has raised
$350 million from governments, foundations,
and other donors around the
world. IAVI and its global network of
nonprofit, government, and for-profit
corporate partners have advanced five
vaccine candidates to clinical trials in
eight countries. And an independent
evaluation last year concluded that the
initiative had “met or exceeded most
of its key goals and has been a very
effective and positive force in the
development of an AIDS vaccine.”

How did you get consensus within
the Rockefeller Foundation to
launch IAVI?

There wasn’t consensus. In fact, there
was a lot of concern.
Initially,
everybody understood
that business
needed to be
engaged in solving
some of these big
problems. But
people got really
nervous about the
legal issues of
foundations working
with for-profit
institutions.

How did that get
ironed out?

I give then-Rockefeller
president
Peter Goldmark
credit because
although he kept
losing his nerve,
he always came
back to the importance
of the problem and supported
it. And I’m very pushy and stubborn,
so we kept working through it and we
eventually took it to the board. It was
a really wonderful board meeting
because the woman who defended it
from the trustees’ point of view was
David Rockefeller’s daughter Peggy
Dulany. She talked about why it was
important for foundations to get
involved in big problems like this.

What did the Rockefeller Foundation
do to help launch IAVI?

The concept of public-private partnerships
in the health area really hadn’t
gone very far by the early ’90s. The
foundation really believed having a
private sector point of view was critical
to what they were doing. Veteran
biotech venture capitalist Paul Klingenstein
was working with the foundation
then
because they were
trying to bring in
private-sector people
to think about
how that might
intersect with what
was going on.

But it was clear
with this particular
problem that one
needed to bring
the public and private
sectors
together to solve it,
so we began the
process of trying
to think through
that. The foundation
was supportive
of it as a big
concept, but also
was quite concerned
and cautious
about doing it
because it was a new area. So we did a
very thorough workup of the issues
around it – holding meetings, putting
out reports, getting consensus from a
large number of people – before we
finally launched it. And the foundation’s role in all of this was to be the
convener and to finance this. That
allowed two things: the flexibility to
do it, and the credibility that allowed
it to happen. If I had been convening
this as Seth Berkley, I would not have
been able to do it, but convening it as
the Rockefeller Foundation, I was able
to bring people to the table.

Tell me about the big research meeting
in 1994 at Rockefeller’s Bellagio
Study and Conference Center in
northern Italy.

That meeting was described by Science
magazine as the most important and
diverse meeting that had ever been
held on AIDS vaccines, but it was
more than researchers. We brought in
U.N. agencies and the World Bank.
We also brought some biotech companies
and government officials. We
tried to bring in a broad cross-section
of stakeholders and ask whether there
was a problem. And the answer was
yes.

The scientists thought a vaccine
was possible but that we were going
about it the wrong way. Later, there
were meetings on structure and
financing, intellectual property, and,
most interestingly, meetings of the
AIDS community and the developing country
leaders because they were
threatened by the idea of some new
initiative. Was this going to be taking
away from treatment? Was it going to
take away from other activism?

How big a stumbling block was the
AIDS community’s opposition?

“Opposition” is too strong. The AIDS
community in the North at that time
was dominated by those who were
HIV-positive. And they were pushing
hard – rightfully so – to get treatment
to be the issue; a preventive vaccine
was not their highest priority at the
time. So one issue was convincing
them that this wasn’t going to take
away from the critical effort that was
going on to develop treatments.

Did you have a business plan when
you began?

We did. We had five different reports
that put together a vision of what the
organization should look like, what its
output should be, what the science
program should be, how it should be
structured and financed. When we
did the business and finance stuff, we
brought people together from
finance, industry, investment banks.
With the intellectual property report,
we brought lawyers and IP groups
together.

How did you come up with a business
plan for such a risky, long-term
project?

Initially, it didn’t look like a business
plan that you’d be familiar with
because we had to do it in stages.
What we basically did was sit down
and ask how we would capitalize such
a thing. What type of mechanism and
successes would we have to have to be
able to get there? And when we went
back and looked at the plans, they
were pretty damn close to what we
ended up doing.

At first, we advocated for vaccines,
got them on the agenda, and began to
get a number of foundations that
weren’t involved in the AIDS field to
give founding grants. Then we put
public-private partnerships together
and did some science projects
together that would show the world
how vaccine development could be
done with speed. Once we did that,
we marched to the governmental
donors and said, “We understand this
is risky, but we’ve already got some
track record and it’s really important
and you ought to support it.”

We started with European governments
instead of the U.S. because we
knew we would never get Europe if it
were a Rockefeller operation with a
loudmouth American president operating
out of New York. So we started
with the U.K. and then the Netherlands,
Ireland, and Canada We built
up support outside of the U.S., which
then allowed the U.S. to join a set of
countries that were already out there
and have it feel like a really international
effort.

Who was involved in drafting the
business plan?

We’ve had an active board, and initially
the board was much more operational
then it is now. It was very
much like the kitchen cabinet that got
things done. We also had outside
advisers who helped us. One person
who was very critical was Paul Klingenstein.
At that point he was an
adviser, but recently he has joined our
board. He helped us with a lot of
ideas and that’s why IAVI had a venture
capital feel to it when it started.

Our first chair was former Levi
Strauss International president Lee
Smith, who had worked in the AIDS
area. His whole career was on the
business side and that was very helpful
in terms of creating the business
case. Phil Russell, former chief of the
U.S. Army Medical Research and
Development Command and a vaccinologist,
was also a founding board
member, as was Peter Piot, the head
of UNAIDS.

What is the upside – and downside –
of partnering with for-profit drug
companies?

The most important thing is getting
the incentives right. And making sure
you have the same language and the
same understanding of what’s going
on. When we first started, there was
not a lot of this type activity going on
in this field, and the concept of a public-
private partnership was foreign.
There was skepticism about whether
it made sense. There was a sense that
those in the nonprofit sector were
good doers, but couldn’t be hardnosed
and get things accomplished,
and business people were hard-nosed,
but wouldn’t work if there weren’t
the right incentives in place. We’ve
become more sophisticated as we’ve
gotten bigger and put in a fair amount
of business-development experience
into IAVI. And companies have
become more comfortable with the
concept of structuring partnerships
together.

It’s still a little hard getting the
incentive structure right, because a
company’s goal is to maximize profit
while our goal is to maximize the
speed and availability of a vaccine for
the poor. So we use different tools to
try to get them to work with us and
it’s a matter of trying to figure out
how to best do that.

When the polio vaccine was developed,
Jonas Salk gave it away. If an
AIDS vaccine does get formulated,
who decides how to price it for the
developing countries where it’s
needed most?

We have varying intellectual property
agreements. Some have language that
talks about direct pricing – that is, we
don’t know what the price will be, but
it’ll be a market price for private sector
and cost-plus for the public sector
of the developing world. We’ve got
other agreements that allow us to
look for alternate manufacturers and
if they can make it at a cheaper cost,
then the company either has to use
that manufacturer for the developing
world, or reduce their price to that
level.

We’ve got other ones where we
actually hold the IP and we’ll control
how it’s being done. But in every one
of our agreements, access is there and
that’s the most important component
to us.

I take it nobody is going to be giving
this vaccine away?

No. In fact, I am against this type of
charity as it is not a sustainable model.
Most people feel that they’re not
going to make much money in the
public sector and the developing
world. However, if they produce the
vaccine in large enough quantities to
reach economies of scale, that will
then reduce the cost of each individual
dose and therefore increase profit
in the developed world.

Did the Rockefeller Foundation take
a seat on your board?

No. We made a decision early on that
a funder should not be on the board.
I think that was quite a smart decision
because we were able to grow
the funding from a very few foundations
to very large numbers of
groups. We kept the IAVI board as an
independent governance structure.
We went for funding to foundations
that weren’t working in AIDS
because we didn’t want to rob Peter
to pay Paul.

Of your $75 million annual operating
budget, about 80 percent comes
from governments. Why don’t you
get more from foundations?

It’s been a tragedy. Most funders have
gotten out of the international health
area. One of the reasons is because
the U.S. National Institutes of Health
is such a huge funding source. When
Rockefeller started in health early in
the 1900s, there was no NIH. Now
the NIH’s budget is $28 billion a year.
So a lot of foundations have said, “We
don’t really want to be in that space.”

Why is that?

If you go to most foundations, and
you have a new area, it’s out of their
guidelines. When we started IAVI,
AIDS vaccines were outside the
guidelines for 100 percent of foundations.
Nobody had ever done it. It
wasn’t being funded. We were able to
convince some but then other foundations
would say: “You’ve got all the
support from Rockefeller or the
Gates Foundation or governments or
whatever, so we don’t need to be
there. We want something that we
can have our name on or be most
identified with.” So it’s been very
hard to get new foundations. And I
think that’s really unfortunate
because this is such a big problem.

And if you really want to change
the world, you’ve got to take on big
problems. If you do, you need a lot
of different groups helping you and a
lot of support. A lot of foundations
will look at that and say, “Well, I can
make a real splash in this other field.”

But if we could find an AIDS vaccine,
wouldn’t that make more of a
difference in the world than whatever
that other field is?